Ugly 3yr Treasury Auction and Copper Hits Record High

About this Video

• Video Title: Ugly 3yr Treasury Auction and Copper Hits Record High
• Channel: Infranomics
• Speakers: The speaker's name is not explicitly mentioned in the transcript.
• Duration: 00:15:49

Introduction

This video analyzes a recent three-year Treasury auction, noting its "ugly" results, and discusses the record high in copper prices. The speaker explains key metrics of Treasury auctions (high yield vs. when issued, stop through, and tail), and relates these to current market conditions and the potential impact of upcoming Federal Reserve decisions and political commentary.

Key Takeaways

1. Three-Year Treasury Auction Analysis: The auction showed weaker-than-expected demand, indicated by a "tail" rather than a "stop through," suggesting less investor confidence. Bid-to-cover was also stronger than in longer-term auctions. Direct bidders (institutions) took a record 29% of the bonds, while indirect bidders (foreign investors) took 54%.
2. Thirty-Year Treasury Yield: The 30-year Treasury yield approached 5%, nearing decade highs, a level last seen before the 2008 Global Financial Crisis (GFC). This rise is significant given the current lower nominal growth.
3. Yield Curve Steepening: The yield curve has steepened since the Fed began cutting rates, with a widening gap between short-term and long-term maturities. This "bare steepener" is bearish for bonds. The speaker contrasts this with the "bull steepener" seen during the GFC.
4. Trump's Comments and Potential Fiscal Dominance: Donald Trump's calls for further interest rate cuts are discussed, raising concerns about potential inflationary pressures and a "fiscal dominance" approach.
5. Copper's Record High: Copper prices hit a record high, partly driven by a 50% tariff announcement, demonstrating market volatility.